EPA believes Chevron was aware of pollution violation

Search warrants served on two Cook Inlet oil facilities last week were based on federal environmental regulators' suspicions that Chevron Corp. had knowingly violated its air pollution permits and made false statements, court filings show.

An Anchorage federal court magistrate on Jan. 7 authorized the U.S. Environmental Protection Agency's Criminal Investigation Division to seize computers, files, photos and other records at Chevron's Trading Bay Production Facility and Granite Point Tank Farm.

In an affidavit, EPA Special Agent Matthew Goers told the judge that his agency had obtained sufficient information to suspect that Chevron and possibly its subsidiaries, managers and employees had committed felonies, including Clean Air Act violations and false statements to the federal government.

The searches occurred Jan. 12 and 13, with federal investigators flying to the two remote, on-shore Chevron facilities on the west side of Cook Inlet in an Alaska Army National Guard Black Hawk helicopter, according to state and federal officials.

Chevron on Thursday said it is cooperating with the investigation but declined to discuss the EPA's court filings.

ADVERTISEMENT "In May of 2008, we provided the government with voluntary disclosure relating to these issues and have been cooperating with the government's information requests since that time. We take such non-compliance allegations seriously," the company said in a written statement, provided by Chevron spokesman Mickey Driver.

At Trading Bay and Granite Point, Chevron subsidiary Union Oil Co. of California processes and stores crude oil from several Cook Inlet production platforms. The company then ships the oil to the Tesoro refinery in Nikiski.

SHUT-OFF EQUIPMENT

The alleged violations began in 2006, when Chevron shut down a vapor control unit for two of its oil storage tanks at Trading Bay.

In 2007 or earlier, the company also shut down the vapor control units for oil storage tanks at Granite Point, according to Goers' affidavit.

The vapor control units were designed to capture vapor from the oil before it escaped the tanks and reuse the vapor as fuel. Shutting the units down allowed a significant amount of air pollution to escape from the tanks, Goers wrote.

Chevron had described the tanks to regulators in 2006 and 2007 as "insignificant sources" of pollution that emitted no more than 2 tons per year of volatile organic compounds and 2 tons per year of hazardous air pollutants. Both groups of chemicals are regulated as toxic pollutants that can cause health problems.

Instead, the Trading Bay tanks released more than 100 tons per year of volatile organics into the air from 2006 to 2008, according to Goers, citing Chevron estimates. The Granite Point tanks released more than 15 tons per year of crude oil vapors in the same time period, he said in the affidavit.

In 2008, Chevron sent a letter to state regulators saying it had potentially been violating its Clean Air Act permit at Trading Bay since shutting down its vapor control unit two years earlier. It requested that regulators invoke a federal policy that waives or reduces fines for companies that self-report their own violations.

In 2009, a state inspector visited Granite Point and pointed to its tanks, asking how its vapors were recovered. A Chevron operator told her that its vapor control unit "was not operating at the time because a necessary compressor was not operating." Regulators later learned that the unit had shut down in 2007, Goers wrote in his affidavit.

On the day of the state inspection, Chevron sent a letter to state regulators, asking to amend its previous filings about air pollution at Granite Point. The company said that it hadn't adequately described the air emissions at the tank farm when it applied for a permit in 2006, according to the affidavit.

FALSE STATEMENTS?

The purpose for the search warrants was to seize documents and other evidence that might show whether the company knowingly withheld information and gave "material false statements" to environmental regulators, the affidavit said.

From 2006 to 2008, Chevron submitted documents to environmental regulators saying that its Cook Inlet facilities complied with their air permits. In 2007, company officials told regulators that they were still using the vapor control system at Trading Bay, and that the tanks were not venting to the atmosphere, Goers wrote.

Goers also interviewed current and former Chevron employees who described problems with the vapor control system at Trading Bay before its shutdown in 2006, he wrote.

"Problems attributed to the vapor recovery system by current and former Chevron employees include the following: fugitive vapors escaping from the roof of the tanks, improperly sized compressors, damaged and/or inoperable circuit boards, insufficient parts, repair requests which were unsupported by management, and various other problems with the system which tend to indicate that the vapor recovery system was not functioning properly, may have been out-of-service for extended periods of time, and then eventually led the vapor recovery system to not function," Goers wrote.

Chevron officials told state regulators that it deactivated the vapor control unit for its Granite Point tanks because the company wasn't producing enough natural gas to operate the compressor it used to guide the vapors into the unit, according to the affidavit.

U.S. Magistrate Deborah Smith signed the warrants to search and seize records at the two facilities, which are not accessible by road. The Alaska Army National Guard confirmed Thursday that it flew the agents to western Cook Inlet to conduct the searches.